In a drive to survive, GM and Chrysler stay one step ahead of a bankruptcy filing.
GM will scrap the 84-year-old Pontiac brand, close more plants, cut 23,000 workers by 2011 and essentially shrink by a third over the next six years.
If bondholders accept a deal to convert their stake to stock - and the company avoids bankruptcy - the government and the unions would end up owning 89% of GM.
Meanwhile, Chrysler won more concessions from its unions as it races toward a Thursday deadline to restructure or face bankruptcy. The clock ticks for these two companies. Either way, it is bad news for American autoworkers and the towns they live in. There will be more jobs lost.
Swine flu is hammering airline stocks and anything related to travel and leisure. If SARS and bird flu are any indication, here’s how this story plays out: Treasuries rally because they are seen as the global safe haven. Drug stocks rally – especially any company with a flu virus or treatment on the market or in the pipeline.
Stocks in general remain nervous, because a global health threat comes at a time when the global system is fragile and confidence scarce. That said, I am impressed stocks have held up so well. Maybe the cue is from GM and a feeling it might avoid a catastrophic bankruptcy.